09.20.06

Cantwell Continues Push for Extension of State Sales Tax Deduction

Republican leaders block sales tax deduction for third time in one week; IRS says tax changes needed by October 15 for them to take effect for 2006 tax year

WASHINGTON, DC – Wednesday, U.S. Senator Maria Cantwell (D-WA) criticized the Senate Republican leadership’s refusal, yet again, to restore tax fairness for Washingtonians after Republican leaders once again rejected a request that the Senate approve an extension of the state sales tax deduction and other important tax cuts. The measure offered by Senators Max Baucus (D-MT), Cantwell, and others would have extended the state sales tax deduction, the research and development tax credit, a tax deduction for college tuition, and a deduction that would help those who work in the Northwest timber industry. This same bill was also blocked by the Republican leadership last Wednesday night and again Thursday morning.

“By holding tax fairness hostage and refusing to consider this measure on its own merits, Republican leaders are preventing working Americans in states like Washington from getting the fair treatment they deserve,” said Cantwell. “This should have been passed months ago, and I'll keep working with my colleagues on both sides of the aisle get this extension signed into law without any more unnecessary delays. To keep this deduction for my state from becoming a political bargaining chip year after year, I'll keep pushing to make this deduction permanent.”

Senate Republican leaders have thus far insisted on tying several bipartisan tax measures, including the sales tax deduction, to controversial legislation to repeal the estate tax for multi-millionaires and a minimum wage proposal that non-partisan, independent experts said would have cut the salaries of Washington state’s tip workers. In July, Cantwell voted against the so-called ‘Trifecta’ measure, which even the bill’s authors have acknowledged has little chance of passing. The IRS has said it needs tax changes by October 15 for them to go into effect for the 2006 tax year.

In most states, taxpayers can deduct state income taxes from their total income taxed by the federal government. However, from 1986 until 2004, residents of states with a higher sales tax in place of state income taxes went without a deduction for sales taxes. In 2004, Cantwell worked with a bipartisan group of senators and representatives to get this deduction signed into law, and has fought continuously since then to extend the deduction and make it permanent. Without an extension of the state sales tax deduction, Washingtonians will be unable to deduct the sales taxes they pay on their 2006 federal income tax returns.

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